E-L Financial Corporation Limited
TSX : ELF
TSX : ELF.PR.F

E-L Financial Corporation Limited

July 28, 2005 14:45 ET

E-L Financial Corporation Limited: Report To The Shareholders

TORONTO, ONTARIO--(CCNMatthews - July 28, 2005) - For the six months ended June 30, 2005, E-L Financial Corporation Limited (TSX:ELF)(TSX:ELF.PR.F) earned net operating income(1) of $56.8 million or $13.47 per share compared with $37.0 million or $9.21 per share for the comparable period last year.

Total net income, including investment gains and income from equity method investment, for the six month period was $134.5 million or $32.80 per share compared with $95.7 million or $23.80 per share for the comparable period last year.

The figures for 2004 have been restated to reflect the change in accounting policy as set out below.

As a result of the new Canadian Institute of Chartered Accountants (CICA) Accounting Guideline 18, Investment Companies and changes in industry practice, the Company changed its accounting policy, effective January 1, 2005, for portfolio investments and investments over which the Company has significant influence. Portfolio investments are now measured and reported in the consolidated financial statements at their fair value with changes in fair value recognized in income in the period in which the change occurs. The Company has the ability to exercise significant influence over United Corporations Limited, a qualifying investment company, and accounts for this investment ("Equity method investment") under the equity method with changes in equity value being recognized in the period in which the change occurs. Previously, unrealized gains and losses for both of these types of investments were recorded directly to Shareholders' equity. Both Portfolio investments and the Equity method investment continue to be effectively carried at fair value on the Consolidated balance sheets. This change in accounting policy leaves the amount of Shareholders' equity unchanged.

As was the case in the first quarter, the increase in second quarter commission expense relative to the second quarter of 2004 was primarily driven by life insurance results. This increase in turn was a consequence of quarterly sales of both individual insurance and segregated fund products being more than double the levels achieved during the second quarter of 2004.

Strong general insurance results in 2005 are benefiting from the tail end of the underwriting cycle's improvements in rates and claims frequency. Current price decreases in all auto lines, emerging price competition in commercial lines and an anticipated increase in claims frequency are expected to exert downward pressure on general insurance earnings for the balance of 2005 and for 2006.



DUNCAN N.R. JACKMAN
Chairman & Chief Executive Officer


SEGMENTED INFORMATION 2005
(thousands of dollars)
----------------------------------------------
Corporate General Life
investments insurance insurance Total
----------- --------- --------- -----------
Revenue $ 83,507 $ 584,474 $ 400,588 $ 1,068,569
----------- --------- --------- -----------
----------- --------- --------- -----------
Net income:
Income excluding the
undernoted $ 6,932 $ 46,096 $ 3,749 $ 56,777
Amortization of
investment gains - - 11,402 11,402
Gain on sale of
investments 701 3,970 - 4,671
Income from equity
investment 23,554 - - 23,554
Change in unrealized
appreciation of
portfolio investments 38,078 - - 38,078
----------- --------- --------- -----------
$ 69,265 $ 50,066 $ 15,151 $ 134,482
----------- --------- --------- -----------
----------- --------- --------- -----------

2004(2)
(thousands of dollars)
----------------------------------------------
Corporate General Life
investments insurance insurance Total
----------- --------- --------- -----------
Revenue $ 63,589 $ 571,226 $ 341,597 $ 976,412
----------- --------- --------- -----------
----------- --------- --------- -----------
Net income:
Income excluding the
undernoted $ 5,205 $29,876 $ 1,921 $ 37,002
Amortization of
investment gains - - 10,068 10,068
Gain on sale of
investments 971 4,988 - 5,959
Income from equity
investment 18,773 - - 18,773
Change in unrealized
appreciation of
portfolio investments 23,870 - - 23,870
----------- --------- --------- -----------
$ 48,819 $ 34,864 $ 11,989 $ 95,672
----------- --------- --------- -----------
----------- --------- --------- -----------

(1)Net operating income is before investment gains and income from
the equity method investment.
(2)Restated for the accounting policy change.


CONSOLIDATED STATEMENT OF EARNINGS
For the six months ended June 30
(thousands of dollars except per share amounts)

2005 2004(2)
--------- ---------
REVENUE
Insurance premiums $ 752,105 $ 712,634
Annuity premiums 61,107 38,826
Investment and other income 152,702 140,694
Amortization of realized
investment gains 15,802 12,846
Amortization of unrealized
investment gains 7,950 8,620
Income from equity method investment 28,364 18,773
Change in unrealized appreciation of
portfolio investments 44,615 35,190
Gain on sale of investments 5,924 8,829
--------- ---------
1,068,569 976,412
--------- ---------

EXPENSES
Claims and policy benefits 614,298 601,209
Commissions 161,804 134,282
Operating 87,293 80,566
--------- ---------
863,395 816,057
--------- ---------

Income before the undernoted items 205,174 160,355

Taxes
Income 41,305 34,695
Premium 22,944 21,821
Investment and capital 1,769 1,753
--------- ---------
66,018 58,269
--------- ---------

Income before policyholders' and
minority shareholders' interest 139,156 102,086

Policyholders' and minority
shareholders' portion of income 4,674 6,414
--------- ---------

NET INCOME $ 134,482 $ 95,672
--------- ---------
--------- ---------

NET INCOME PER SHARE $ 32.80 $ 23.80

TOTAL ASSETS (including
segregated funds) $ 8,781,957 $ 7,603,959

CAPITAL AND SURPLUS $ 1,811,699 $ 1,472,161


(2)Restated for the accounting policy change.



Contact Information

  • E-L Financial Corporation Limited
    Mark M. Taylor
    Executive Vice-President and Chief Financial Officer
    (416) 947-2578